Fortune Favours the Balanced Mind
“The stock market is ultimately the reflection of human behaviour, right?”
The financial professional toward whom I had directed the question abruptly answered with a “well, not exactly”, but was unable to justify the disagreement.
I understand that it’s made up of a number of components that render it the ever untameable beast, but ultimately, were it not for human beings, companies wouldn’t exist, and neither would all those transactions.
The question was posed by a weathered philosopher freshly entering the exciting world of economics. The answer was provided by an economist who has never ventured into philosophy.
Michael Simmons, Entrepreneur and regular contributor to Forbes magazine, recently published an informative and insightful article about one of the most powerful modern minds that stays out of the limelight all too often: Charlie Munger. In case you haven’t seen that name before, he’s Warren Buffett’s right hand.
Simmons’ focus is Munger’s broad mind, which has earned him the title of expert-generalist: “someone who has the ability and curiosity to master and collect expertise in many different disciplines, industries, skills, capabilities, countries, and topics. Etc.” (Cf. Simmons’ article)
In fact, Munger’s longest correspondence with Bill Gates had absolutely nothing to do with money. They discussed the mating habits of naked mole rats!
Whilst Daniel Kahneman’s known as the grandfather of behavioural finance, Munger might just be the great-grandfather, as he’s been following his own inter-disciplinary approach for 70 years, resulting in his 22 biases that have informed a lot of his investment decisions.
With the amount of academic research doubling every year, and the number of specific disciplines growing exponentially, it may seem like a daunting task to even determine where to begin.
But finish the book once you start it.
Charlie Munger taught us that Daniel Pink’s prophesy is gradually fulfilling itself: that this, the conceptual age, would belong to the ambidextrous minds.
We certainly evolve and change, but I believe that Munger’s true genius lies in the fact that he’s uncovered the most essential truth: that we, and our behaviour, don’t really ever change.